EU Court of Justice Clarifies Interpretation of Consumer Sale of Goods Law

24 June 2019

The Court of Justice of the European Union (the “ECJ”) has ruled that EU Member States are competent to establish the place where the consumer is required to make goods that were acquired under a distance contract, available to the seller, in order for these goods to be, e.g., repaired. Article 3 of Directive 1999/44/EC on specific aspects of the sale of consumer goods and associated guarantees (the “Directive”) stipulates, in this connection, that the consumer can “require the seller to repair the goods or […] to replace them, in either case free of charge, unless this is impossible or disproportionate”. The ECJ also held that the consumer’s right to having goods brought into conformity “free of charge” does not, in principle, include the seller’s obligation to pay for the cost of transporting those goods.

On 23 May 2019, the ECJ delivered its judgment in response to a request for a preliminary ruling from the District Court of Norderstedt in Germany (the “German Court”) in a dispute between a consumer, Christian Fülla, and a German company, Toolport GmbH (“Toolport”) regarding the purchase of a defective tent.

After having bought the tent from Toolport by telephone and having had it delivered to his place of residence, Mr. Fülla discovered that the tent was defective. He asked Toolport to bring the tent into conformity with the contract of sale at his place of residence. Toolport, however, considered that Mr. Fülla’s claims were unfounded, following which Mr. Fülla requested the rescission of the contract and reimbursement of the purchase price of the tent. Toolport failed to comply with that request and Mr. Fülla consequently brought an action against Toolport before the German Court. The main issue at hand related to the place where the tent was to be brought into conformity.

Under German law, the consumer is required to place the item in question at the seller’s place of business for it to be brought into conformity. The German Court, however, was unsure whether such a requirement would be compatible with Article 3 of the Directive, as transport is likely to be seen as a significant inconvenience for the consumer, which the Directive seeks to avoid. Furthermore, the German Court was uncertain as to whether the wording “free of charge” under Article 3 of the Directive implies that the seller also has to take charge of the consumer’s transportation fee. Finally, the German Court raised doubts as to when a consumer’s right to rescission of the contract can be ensured. The German Court thus decided to stay the proceedings and refer these questions of interpretation to the ECJ (the EU’s highest court) for a clarification of the Directive’s provisions (i.e., for a ‘preliminary ruling’).

At the outset, the ECJ explained the purpose of Article 3 of the Directive: if the goods delivered to the consumer are not in conformity with the contract of sale, the consumer has the right to require the goods to be brought into conformity by repair or replacement, without any significant inconvenience to the consumer. If that is not possible, Articles 3(5) and (6) dictate that an appropriate reduction in price or the rescission of the contract must be granted.

Finding that the place in question can vary depending on the specific circumstances of each individual case, the ECJ left it up to the national court to specify such a place, taking into account the three-pronged requirement that the goods must be brought into conformity: (i) free of charge; (ii) within a reasonable time; and (iii) without significant inconvenience to the consumer.

With respect to the “free of charge” requirement, the ECJ clarified that this refers to the costs necessary to bring the goods into conformity, such as the costs of postage, labour and materials. The ECJ concluded that this does not include the seller’s obligation to pay for the cost of transporting those goods from the consumer to the seller’s place of business, unless the cost were to constitute such a burden as to deter the consumer from asserting his rights. According to the ECJ, this is for the national court to determine.

Finally, with respect to the rescission of the contract, the ECJ first noted that the consumer may require the seller to repair or replace the goods, unless this is impossible or disproportionate. The ECJ made clear that rescission is only available if neither of the two options is convenient, or if the seller fails to comply with the requirements set out above. Accordingly, the ECJ favours the performance of the contract instead; rescission should be considered as a solution of last resort.

In the case at hand, where Toolport did not respond to Mr. Fülla’s request nor specify any appropriate steps to bring Mr. Fülla’s tent into conformity with the contract of sale, Mr. Fülla was unable to have his item repaired or replaced within a reasonable time. In these circumstances, the ECJ found that the Court should ensure Mr. Fülla’s right to a rescission of the contract.

Hong Kong sellers will appreciate that the ECJ’s ruling is relevant and important for consumer sales, especially those made at a distance, e.g., via the internet. A consumer, regardless of where he may be located in the EU, will always have the right to a remedy pursuant to the provisions of the Directive and vis-à-vis the final seller, should the goods purchased by him be defective at the time they were delivered. Any repair or replacement must be completed within a reasonable time and without any significant inconvenience to the consumer, taking account of the nature of the goods and the purpose for which the consumer required the goods. The remedies permitted under the Directive must be carried out ‘free of charge’. This refers to the necessary costs incurred to bring the goods into conformity, particularly the costs of postage, labour and materials.

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